Budget 2026 Real Estate Expectations: Make Affordable Housing Match Real Market Conditions

As the Union Budget 2026 approaches, India’s real estate sector is looking beyond headline-grabbing sops and instead seeking structural fixes to long-standing regulatory, cost and financing challenges. From redefining affordable housing and rationalising taxes to faster approvals, green incentives and clearer rules for redevelopment, townships and emerging asset classes, developers and homebuyers alike want policies that reflect today’s market realities.

With construction costs rising, demand diversifying across premium, senior and Tier-2 housing, and sustainability becoming central to urban growth, Budget 2026 is being seen as a critical opportunity to set the tone for the sector’s next phase of expansion.

Talking about the industry’s budget expectations, Anuj Puri, Chairman, ANAROCK Group, says the real estate sector's hopes for the Union Budget 2026 are to update old definitions of affordable housing and give people some financial relief. “The industry needs the price band by which the government defines affordable housing to go up from Rs 45 lakh to Rs 80–90 lakh. Also, it should expand the criteria for affordable housing sizes, which are currently 60–90 sq.m,” he adds.

Inflation in construction costs has gone up since 2017. Some of the main demands are lowering the GST on construction contracts from 18 per cent to 12 per cent, and ideally 5 per cent - and bringing back tax breaks for developers who build affordable housing.

“The sector also needs stamp duty and registration fees to be rendered uniform across all states, since they currently range between 7.5 per cent and 12 per cent, to make homes more affordable for buyers,” says Puri.

Heena Chheda, Partner, Economic Laws Practice, observes that real estate developers and homebuyers are looking to the Union Budget 2026 for relief on several long-pending issues.

“The first big demand is for stamp duty benefits for green homes. Industry bodies want the Central government to nudge states to offer standardised stamp duty concessions to homebuyers who purchase certified green properties. If buying an eco-friendly home becomes cheaper, more people will choose sustainable housing, instead of it being limited to a premium segment,” she says.

Currently, MahaRERA regulates ‘new construction’ sold to third-party homebuyers, not the ‘rehab component’ (the flats provided to existing tenants/owners) in a redevelopment project. This creates a significant regulatory vacuum. Homeowners who have vacated their old premises and are suffering on account of inordinate delays and defaults of the developer in payment of rent are stuck in limbo, as there is no fast-track grievance redressal forum.

“The stakeholders are expecting legislative clarity and a robust enforcement mechanism to ensure that the thousands of families participating in redevelopment are adequately protected,” Chheda says.

In integrated township projects (ITPs), multiple developers often work on different sectors of the same township. Currently, RERA does not provide for a specific master developer category who would be responsible for common infrastructure like internal roads, utilities and shared amenities. Hence, disputes often arise when one part of the township is delayed or under-delivered, or when such common infrastructure is not completed. Developers are urging the government and regulators to create such a category so as to bring express clarity on the responsibility and liability between the master developer and specific project developer, so as to protect homebuyers.

The industry also expects the Budget to introduce or streamline a true single window clearance system. “Such a system would bring approvals from different authorities onto one unified platform, thus speeding up both construction and operational timelines for projects, improving transparency and financial efficiency,” informs Chheda.

Currently, ‘affordable housing’ is mostly defined by carpet area, with some price limits added on. But this does not match real market conditions, especially in big cities where even very small flats can be very costly.

“Stakeholders are expecting the government to redefine affordable housing based primarily on the total cost of the home, with city-wise or zone-wise price limits so that many more projects come under the affordable housing category, making them eligible for tax benefits, subsidies and lower interest home loans,” she says.

Apart from these demands, developers are once again pushing for ‘industry status’ for real estate as a whole. Currently, benefits are largely limited to the affordable housing segment. Full industry status would make it easier to access institutional finance at lower interest rates and allow more stable, long-term funding structures.

Some developers are pushing for some sops for luxury housing.

Parvinder Singh, CEO, Trident Realty, says, “In the Budget 2026, we hope to see continued policy support for the premium housing segment across India. This becomes especially important for Tier 2 cities, where a lifestyle transformation is underway. Active home buyers are demanding larger living spaces, upscale amenities, and gated community environments that match metro standards. If the government provides incentive-linked funding and greater investment in urban infrastructure, it will further strengthen these emerging markets and enhance buyer confidence. In Tier 2 cities, luxury housing is not only about premium living; it also helps create jobs, attract talent, and build future-ready urban ecosystems.

Ashish Agarwal, Director, AU Real Estate, has similar views. “We look forward to a continued policy stability and growth-focused incentives for the NCR luxury housing market in pre-budget expectations for 2026. Increasing incomes, wider global exposure, and a desire for safe, amenity-rich communities are the demand-driving factors for premium homes in the NCR. Buyer sentiment will be further enhanced by supportive tax policies, streamlined stamp duties, and infrastructure development across important areas. Additionally, quicker environmental and development clearances will enable developers to deliver projects more efficiently. The NCR remains one of the most influential real estate markets in the country, and a progressive budget can play a significant role in sustaining this momentum,” he says.

Incentives for senior living and retirement homes are also on the sector’s wishlist, and it hopes the budget will provide a perfect opportunity to acknowledge retirement homes as a crucial part of India's real estate.

“With the elderly population of the country poised to grow 300 per cent by 2030, there is an increasing need for well-designed, secure, and supportive communities for seniors. Incentives for developers, GST rationalisation, and clear policy guidelines can help formalise and expand this category. We also hope to see benefits for senior home buyers to ease investment decisions. Senior living is not only about housing, but it’s also about dignity, autonomy, and quality of life in later years,” says Anil Godara, Founder and Managing Director, J Estates.

The NCR area remains the backbone of North India's real estate sector, majorly contributing to residential and commercial development. 

“From the 2026 budget, we are expecting policy interventions to fix infrastructure bottlenecks, streamline approval processes, and expedite environmental clearances.  Measures such as stamp duty reductions, easier access to home loans, and incentives for first-time buyers can reassure end-users and increase demand. Focus on infrastructure, connectivity and livability, and further allocations will further aid buyer confidence and support long-term growth. We anticipate the government will recognise NCR's potential and provide support for sustainable growth,” says Aman Sharma, Founder and Managing Director, Aarize Group.